FDCPA Class Action Defense Cases–Barany-Snyder v. Weiner: Sixth Circuit Affirms Judgment On The Pleadings on FDCPA Class Action Holding Attachment Of Entire Contract To Debt Collection Complaint Was Not An Effort To Enforce Each Term In Contract

Plaintiff filed a class action complaint in Ohio federal court against two debt collection attorneys and the law firm where they worked, Keith D. Weiner & Associates; defendants had filed a lawsuit against plaintiff in Ohio state court seeking to recover $8,146.53, plus interest at the rate of 16% per annum and costs alleged owed a college under a revolving credit agreement that contained the following attorney fees clause: “I/We understand that upon default of any, or all of the terms and conditions of this credit agreement and upon proper service of a NOTICE OF DEFAULT by the College, all signers immediately become, at the option of the college, liable for attorney fees and/or actual or reasonable collection costs which may be added to the Total Amount Due.” Barany-Snyder v. Weiner, 539 F.3d 327, 330 (6th Cir. 2008). The collection action did not seek attorney’s fees, and the court entered in favor of the college did not award attorney fees because the college did not seek such an award. Id., at 331. Plaintiff filed for bankruptcy protection, and the college’s debt ultimately was discharged. Id. Plaintiff’s class action complaint alleged that defendants violated the federal Fair Debt Collection Practices Act (FDCPA) and Ohio’s Consumer Sales Practices Act; the class action alleged that Ohio law “prohibits creditors from recovering attorney’s fees in connection with the collection of a consumer debt,” and that defendants violated state and federal law by attaching the college’s credit agreement with the attorney fees clause to the state court complaint. Id. Defense attorneys moved for judgment on the pleadings, arguing that the class action failed to state a claim; the district court granted the motion and plaintiff appealed. Id. The Sixth Circuit affirmed.

Plaintiff’s theory of the case was that “all signers immediately become, at the option of the college, liable for attorney fees and/or actual or reasonable collection costs” and that this violated the FDCPA’s prohibition against making false, deceptive, or misleading representations in connection with the collection of a debt. Barany-Snyder, at 332. The Sixth Circuit disagreed, holding that because the credit agreement was attached in its entirety, and because the attorney fee clause was not “drawn to the consumer’s attention,” even the “least sophisticated debtor” would not have interpreted the debt collection lawsuit as one seeking attorney fees. Id., at 334-35. The Circuit Court explained at page 335, “Indeed, as the district court noted, adopting [plaintiff’s] position leads to the untenable conclusion that the attachment of a contract to a complaint or dunning letter is equivalent to a present threat to exercise every provision of that contract.” Additionally, “while attachment of an affidavit asserting a possible entitlement to attorney’s fees might have been misleading and deceptive to the least sophisticated consumer, this conduct simply did not amount to a false representation in violation of § 1692e(2).” Id., at 335 (citation omitted). Accordingly, defendants’ debt collection action failed to state a claim under § 1692e(2). Id., at 335-36. Finally, the Circuit Court further affirmed that the debt collection action did not attempt to collect a debt in excess of the amount lawfully owed, so defendants did not violate § 1692f(1) as alleged in the class action complaint. Id., at 336. Accordingly, the Sixth Circuit affirmed the district court judgment dismissing the class action complaint, id.

NOTE: The Circuit Court rejected defendants’ claim that the class action’s FDCPA claims were barred by the statute of limitations on the ground that “[i]ssues adverted to in a perfunctory manner, unaccompanied by some effort at developed argumentation, are deemed waived.” Barany-Snyder, at 331-32 (citation omitted).

Michael J. Hassen's litigation practice spans almost 30 years and emphasizes general business and commercial litigation, including class action defense and unfair business practice representative actions (section 17200).

He represents lenders in all facets of lender litigation, ranging from class actions and unfair business practices based on alleged "predatory" lending and RESPA violations or alleged violations of the Fair Debt Collection Practices Act, to claims alleging elder abuse or challenging the validity or priority of liens.

Michael also has significant experience in business torts such as misappropriation of trade secrets and raiding of corporate employees, ADA claims, and all phases of commercial and real estate finance, construction finance and construction defect claims.

He is experienced in appellate matters, having had primary responsibility for preparing more than 100 appellate briefs.